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Over the past 5 years the importance of the “High Growth Business” and how this relatively small group of businesses disproportionally impa...

Thursday, 22 September 2011

Managing a High Growth Business: The Problems of Badly Managed Growth

Running a high growth business, requires a good deal of planning, and active management. It also requires a longer term view, unfortunately in very many cases fast growth happens by accident and therefore without sufficient planning to maintain growth and certainly not as a result of any long term view.

Never is this more relevant than when talking about plans for growth. The chart explains what happens all too frequently during a period of high growth. This is that after a year of rapid growth the organisation struggles resulting in little or negative growth for the next 18 month to 2 years before resuming . This is extremely stressful for businesses and often results in management backing away from further high growth because of the difficulties experienced

These difficulties include :

Huge effort from owners and staff delivering little or no rewards

Minimal or even negative financial returns as the cost of correcting the consequences wipe out most or all of the financial gains.

Deteriorating customer relationships because service levels cant keep up with revenues.

Low staff morale leading to lower productivity and high staff attrition which is made worse because typically that attrition is made up with a disproportionate amount of your best people.

Finally lost opportunity as management adopt a very cautious growth strategy because their experience of high growth was so painful.

It needn't be the case, making sure you manage the special circumstances that come with a high growth business you can maintain consistent growth over a longer period and consequently become a larger business more quickly and with much less pain.